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About Chart of Exchange Rates

All foreign entity binders must have a Chart of Exchange Rates, as well as local and functional currency assignments.
The information in the Chart of Exchange Rates is used to translate local currency amounts in the
Preliminary Balances and Adjustment
 screens to functional currency. The functional currency amounts carry from the Working Trial Balance to the foreign entity's Sourcing Workpaper and are used during international computes. In a foreign entity binder, functional currency's translated to U.S. Dollars for transfer to forms.
Charts of Exchange Rates may be assigned to, but aren't required for, Foreign Tax Credit (domestic) binders. If a chart isn't assigned, the system assumes Preliminary Balance and Adjustment information are entered in U.S. Dollars. If a Chart of Exchange Rates is assigned to a Foreign Tax Credit binder, alternate currency views are available in the Working Trial Balance and the translated U.S. Dollar amounts flow to the Sourcing Workpaper.
When a Chart of Exchange Rates is assigned to a binder, local, functional, and U.S. Dollar views are available in the Working Trial Balance.
When a Chart of Exchange Rates is first created, you must assign the countries of operations and populate each country's Beginning, Ending, and Weighted Average translation rates. Because exchange rates differ from year to year, the Chart of Exchange Rates must be updated annually. During rollover of the Chart of Exchange Rates, a new chart's created with the same countries as the prior year, and the prior year Ending Rates become the Beginning Rates for the new chart. Once the Chart of Exchange Rates has been rolled over, you must update the Ending and Weighted Average Rates.
  • Beginning
     - Used primarily as a reference. During the rollover process, these rates are populated from the prior year’s ending rates. Translated beginning balances in the tax forms carry from the related binder.
  • Ending
     - Used to translate Balance Sheet information for the 5471, 8858, 8865, and 1120. Also used to calculate a U.S. Shareholder’s Investments in US Property inclusion from a foreign entity.
  • Weighted Average
     - Used to translate Income Statement balances for the 5471, 8858, 8865, and 1120. Also used to calculate a U.S. Shareholder’s Subpart F Inclusion from a foreign entity.
You can either manually enter exchange rates or import them into an existing Chart of Exchange Rates in
Charts
,
Federal
,
Exchange Rates
.

This article applies to:

  • Product: ONESOURCE Income Tax
  • Return type: 1120 Corporation
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